DERBY'S council is to become one of only nine outside London to bring in a guaranteed wage of £7.45 per hour for employees.
The Labour-run authority has pledged to pay what is known as the Living Wage from 2014.
Councillors said the move could help about 1,000 people currently paid the minimum wage.
The current minimum wage is £6.19 for those aged 21 and over. However the Living Wage is calculated according to the basic cost of living in the UK and will set a minimum of £7.45 an hour.
Councillor Sarah Russell, cabinet member for business, finance and democracy, said: "The cost of living has never been higher and it is a travesty of national policy that some people in society work hard and long hours yet still struggle to pay their bills and feed their families.
"We will not stand for that. The council is leading the charge and we will be meeting with business leaders and city employers to encourage others to join us.
"Government policies are pushing the poorest further and further into poverty. We are doing our part here in Derby to help those people.
"Introducing the Living Wage does not only tackle a social injustice, it also makes sound business sense.
"Other employers that have taken this step have reported improved recruitment and retention as well as higher worker morale, motivation and productivity."
The wage will not be introduced in Derby until 2014 , when the city will implement its equal pay review – a process to make salaries fair and non-discriminate.
Miss Russell said it was estimated the changes could help about 1,000 employees. No costs have yet been calculated, but they would depend on the hours people worked and other variables.
The Living Wage has been introduced by 10 Labour councils in London and in Glasgow, Newcastle, Preston, York, Birmingham, Norwich, Cardiff and Oxford.
And today's announcement by the city council coincides with Living Wage Week, which ends tomorrow and has been organised by the Living Wage Foundation to promote the benefits of adopting the scheme.
Sarah Vero, of the Living Wage Foundation, said: "We really welcome the move by Derby City Council and we hope they will lead the way for more businesses in the region to follow suit."
HAVE YOUR SAY: What do you think about these plans? Have your say on our quick, anonymous poll (above right). FIRM IN COURTForge Garage, of Dag Lane, Lullington, near Swadlincote, has been ordered to pay one of its workers £3,906 for failing to pay the national minimum wage.
HM Revenue & Customs obtained a county court judgement against Anthony Blake, the owner of Forge Garage, a motor vehicle repair and MOT-testing business. He was also ordered to pay costs of £222 to HMRC.
